Related articles

Oil prices hit $80 a barrel on Thursday for the first time since November 2014 following the renewed threat of US sanctions cutting supply in an rapidly tightening market.

Total - the third largest company by revenue in Europe - revealed the firm could quit a multi-billion-dollar gas project if a waiver from US sanctions was not secured. Tehran had repeatedly hailed the project between the French giant and the Islamic Republic as a symbol of the nuclear accord’s success.

Total signed a contract in 2017 to develop phase 11 of Iran’s South Pars field with an initial investment of $1 billion. However, in a statement today the firm announced: “Total will not continue the South Pars 11 project and will have to unwind all related operations before 4 November 2018, unless Total is granted a specific project waiver by US authorities with the support of the French and European authorities.”

Total’s announcement comes after German insurer Allianz and Danish oil product tanker operator Maersk Tankers said they were winding down their businesses in Iran, while Joe Kaeser, the CEO of Germany’s Siemens told CNN his company would not be able to do any new business with Tehran.

The news comes as a massive blow to European Union leaders and President Hassan Rouhani, who had hoped the prestigious project could make other international businesses regain confidence in Iran and bring in investment.

EU leaders gathered in the Bulgarian capital of Sofia yesterday for their first meeting on the matter since Trump quit the accord earlier this month, but the 28 EU leaders meeting in Sofia did not make any quick decisions on how to try to shield their economic cooperation with Iran.

European Commission head Jean-Claude Juncker is looking to protect European investment and will pursue a strategy that could include retaliatory sanctions against the US.

However, the reach of the US financial system, the dominance of the dollar and the presence of European companies’ operations in the United States all weaken any potential EU measures.

Oil prices to rise?

One point on which all industry onlookers agree is that the price of oil is set to rise. Jordan Hiscott, Chief Trader at ayondo market told Express.co.uk “geopolitical tensions will cause oil prices to rise for at least six months, possibly a year”.

How high will the price per barrel rise? Mr Hiscott said: ”My initial price target would be $92, but it’s likely it could be over $100 a year from now.”

For the UK, Stuart Lea, head of energy trading at energy consultancy Inenco, told Express.co.uk that the US withdrawing from the Iran nuclear deal will increase gas and electricity prices for UK businesses.

He said: “The spike in Brent oil feeds straight into wholesale gas and electricity prices, and we have already seen them rise significantly since the start of the year.

"Winter 2018 prices have risen by around 15 percent - 17 percent for power and 14 percent for gas since January – rising oil prices have added to other factors that are pushing prices up, from the wider fallout from imposing sanctions on Iran.”

Mr Lea warns that UK businesses are already feeling the effect and those not on fixed contracts will already be faced with higher electricity and gas prices.

He added: “Households could also see higher prices in the future if the cost of oil continues to rise as predicted – whilst energy suppliers buy their energy weeks, months and years in advance to smooth price spikes, any sustained increase in prices will eventually make its way onto the bill.”